We've had a few questions from readers in the past fortnight about Brexit, and they've all contained misinformation, or been plain wrong.
So I thought I'd publish a simple breakdown (here and on Instagram) to explain what's going on.
The most important thing is, if you're an EU customer of the Permanent Style Shop, nothing changes. The only tweak is that you now have to pay your local VAT, rather than UK VAT.
There are no customs charges, because under the trade deal between the UK and the EU there are no tariffs on goods being shipped from PS to EU countries. (If the goods were mostly made in the UK or EU - as nearly all of ours are.)
And, PS is opting to charge local VAT at checkout, so the process is as similar as possible to past experience. Offering this 'landed price' (also known as DDP - 'delivered duty paid') involves some extra admin costs for PS, but nothing for the customer.
Some customers seem to have been confused because they've phoned their local customs office, and not stated that PS goods are all made in the UK or EU. Or, they haven't understood how DDP works (it's not actually paid by us, but by the local courier office).
It also looks like quite a few brands haven't been prepared - shipping from the EU to the UK or vice versa - and have charged customers VAT when they shouldn't, or not put the correct statement on their forms saying where the goods came from.
In fact, when we posted this message last week on Instagram, quite a few followers complained about experiences they've had, where they've been charged customs duties, and VAT twice (local and UK) leading to the product being more expensive.
This shouldn't happen. To summarise:
- If the product is made in the UK or EU, there are no customs duties.
- The only reason you'll be charged duties is if the product is made elsewhere, or the brand hasn't stated the origin correctly on their customs forms.
- You should only have to pay your local VAT now, not UK VAT. If you're in Sweden, this means you're paying 25% rather than the UK 20%; but in Germany until recently, you were paying just 13% (it has since increased to 19%).
- It's up to shops whether to make you pay the local VAT (and an admin charge) when the products get to your country, or whether they pay that in advance. PS has opted to do the latter, to make things easier.
- If you return goods under this system, you get a full refund, including the VAT.
If you have any questions, please do email [email protected]. That goes for brands too - several have already emailed us asking for help, following the Instagram post.
There will also always be a page on the PS Shop site here, being kept up to date.
Thank you, and please help counter the falsities about UK goods now being more expensive.
Simon
To be precise, the shopping experience does not change if the UK company has chosen ‘delivered duty paid’ and the price remains the same if the UK company decided to not include the additional costs into the price. Companies usually advertise on their website (e.g. “we are now shipping all orders into Europe with tax & duty paid”)
Yes, precisely.
Thank you very much Simon for a nice clear summary. I have just briefed my wife accordingly!
It will make us think where things are made…. Will this cause an issue for brands that manufacture beyond the EU (Turkey , Japan and of course China spring to mind)?
Yes it will. Though another factor not mentioned here is that if those countries have a similar free-trade deal with the EU, they won’t have any issues. Eg Japan.
Many thanks for the clarification. There have been several media outlets, especially the BBC, that have been responsible for this misinformation over Brexit.
No worries.
I think part of the problem is that most goods are not made in the UK or EU, so those outlets are often talking about things made elsewhere. They also have to cover buying from the EU, and sending to it, which have different sets of rules.
Hello Simon, unfortunately, we have to pay 19% VAT in Germany, not 13%. To reduce the impact of the pandemic the VAT was lowered to 16% from June until December, but since January 1st 2021 it’s back on 19%.
Cheers, Karsten
Ah, thanks Karsten. Sorry
This is the clearest explanation of the situation with VAT and customs I have heard to date.
Dear Simon, just some push back with respect to your last comment. You are very right to note that the product themselves are not more expensive after Brexit and that the only change is the VAT which applies. However, a hidden “tax” is now included in all transactions, which is the admin fees of the courier companies, which is being directly charged on the customers. And it can be quite big. So, in that respect, products are more expensive. This goes both ways. European products are also more expensive for UK customers. And you have decided to continue with landed prices, which I salute, but that is not the case with a big number of UK shops from which I used to buy. As I have no intention to enter the Kafkaeske Customs system, I will keep my fingers from any shop that does not offer DDP.
Thanks PF. You’re right, there now are these charges. However, they aren’t necessarily being directly charged to customers. With DDP, the company pays these charges, not the customer. It may well be that in the future a company using DDP will need to put up prices to reflect these extra costs, but most aren’t at the moment.
It’s probably also worth saying that this is not something that has just been created by Brexit. It’s just the normal situation for any purchases in the world, outside of a free-trade zone like we used to be in with the EU. So if you buy from the US, in the UK, you have to pay VAT, AND duties, and the courier admin charge. Same if you’re in many Asian countries, for example, and buying from the UK or EU.
Good point Simon. The situation is now the same as buying from the USA. Coincidentally ,here in the NL, there has been a rash of large retailers auto directing to their relevant European websites. I.e Amazon, Next etc. Sadly ,this is all VAT now lost to the UK exchequer .
The position ,for me in the NL,has hardly changed,I don’t pay UK VAT and NL VAT is 21%. Congratulations on organising the store so efficiently and explaining so clearly.
Thanks Peter
Hi Simon – thanks for the clarification.
You talk about VAT and it is very clear but, what about import duties? Is there any threshold that triggers the payment of import duties?
No – as mentioned in the article Diego, there are no import duties between the UK and EU, if the goods are mostly made in the UK or EU. And the company clearly indicates that (they also have to do various things, like state their EU EORI number)
Not directly related, but I think it’s worth adding that – irrespective of any customs changes or lack thereof in relation to Brexit – you might now experience some idiosyncratic delays and issues when ordering goods from the UK. Depends on your country’s policies regarding shipments from the UK in the COVID times. E.g. my partner ordered a sweater from one of the Aran knit companies in Ireland, and it was sent a month ago through London. Still not here.
Thanks Robert. The couriers as far as I’m aware don’t have any restrictions due to Covid at all (thankfully that’s been the case throughout) but there have been delays off and on in the past year, mostly because of the extra precautions taken during transit, and the big increase in volume there has been.
There have also been some delays since Brexit, but it’s mostly (I’m told by the courier) because so many people are shipping things without any customs declarations, despite these now being required. That lack of documentation requires the courier to contact the sender, get the information, then resend and so on.
Just one small information: VAT in Germany on most goods is 19%.
Thanks Knud, yes someone pointed out above that it had changed
Hi Simon, thank you for the clear and concise information – like many others, I’ve been trying to figure this out over the past few weeks (having experienced long delays on things ordered from the EU – nothing clothing/tailoring related).
Question – and apologies if this has been answered – but if I’m ordering shirts from a shirt maker in Naples, say Luca Avitabile, and having them delivered to London via DHL/Fedex etc, there should be no additional charges vs what there were last year, correct? Presumably LA – and all the tailors shipping to other countries around the world that require customs declarations like the USA – are familiar and prepared for the correct paperwork? Including this new DDP “option”?
Now on sending the shirts back for alternations, presumably I need to fill out a customs declaration prior to shipping with DHL/Fedex? Would I then, sending back ‘used’ shirts, be required to pay the DDP? Or does this only pertain to new goods at the point of sale?
In a world where I can’t see lockdown/travel restrictions decreasing anytime soon, I seriously doubt I’ll make it to Italy/the travelling tailors will be coming back to London this year; I imagine anyone looking to make alterations or start new commissions in 2021 will be dependant on shipping things back and forth a few times to Europe. Just curious if you know the ins and outs, as I would guess you’ll be going thru the same thing!
Thank you in advance.
Hi Jon,
No, I’m afraid that’s not right.
DDP has always been an option, but not many people do it. It’s just since the EU change that many shops have started taking it up, to keep things as similar as possible to the situation before.
It’s completely up to the seller whether they do DDP or not. Most will not, as it means they have to pay the courier admin charge, rather than the customer; and because it requires effort to do so – to research, find it’s an option, then specifically set it up with their courier.
If they do DDP, the experience will be as I describe above for PS.
If they don’t do it, you will get a notice from the courier saying you need to pay VAT, duties if the product is not UK or EU-made, and the admin fee.
If you’re sending things back to the EU, you will have to fill out customs declarations, yes.
However, I don’t know whether you can use DDP. It’s usually something only used by companies, sending lots of products.
What will probably happen is that you won’t be able to do so, and the recipient will have to pay taxes/duties on their end. They will probably encourage you to state the value of the shirts as 5 or 10 euros, to make these charges small.
Wondering how this deal affects ongoing bespoke commissions? Ordered a year ago in the UK, they got stuck in the pipeline after just one or two fittings. The deposit was still paid under the old “rules”, just wondering how the balance is going to be made up: old or new rules or both?
And how will it affect future bespoke commissions? A quick look at some f the older invoices tells me that not all tailors have stated VAT explicitly.
Thanks 🙂
Bespoke tailoring is a tricky one, Burt, largely because tailors for a long time have only charged foreign customers as if they were in the UK, even if fittings are done elsewhere. It will only affect EU customers of course, and if you are one, the biggest impact is just likely to be any difference in VAT rates between the UK and your EU country
Thanks for your detailed reply to my original question Simon, and I’ll be honest, still struggling to get my head around how this new situation will pertain to bespoke tailoring sent from the EU into the UK, which I should have made clearer was my main question:
are you saying that I will now need to pay UK VAT “on the door step” (assuming the tailor/shirtmaker doesn’t want to deal with DDP) when my tailoring arrives from the EU into the UK (again assuming these are made in EU articles of clothing) ?
I don’t know if I’ve ever received a proper invoice from an EU tailor (and I’m dealing with several of the ones featured here on the PS site) over the years; presumably they are charging Italian VAT ? And so instead of that, I’d be seeing a lower price to them but then having to make up VAT on the UK side?
Thanks in advance for any clarification, and hope this is useful to anyone else with similar questions, either now or down the line. This seems to the only reliable source of information out there as it pertains to this world!
Yes, that’s right John. And no worries
Thank you Simon
Jon mentioned about buying from the EU for import into the UK and you state its up to the seller about DDP however I thought the new HMRC rules were that the seller must deal with UK VAT for consignments under £135?
Now we are outside the EU other countries like France have a 0 euro threashold for having to register for their sales tax scheme too and having to have a local representative. I assume DDP type schemes doesnt avoid these needs?
Yes – I meant it’s up to the seller whether they do DDP for everything, but there isn’t that issue for goods under £135. Unfortunately there’s no such threshold going the other way, from the UK into the EU.
Yes, DDP does avoid that issue. Otherwise there would be no point in it.
Basically because the local sales tax, eg in France, is paid by the local France office of the courier, eg DHL, when the product arrives in that country. DHL has a local tax representative for their local office.
The admin fee from the courier for DDP is then quite understandable, given the courier has to pay this local tax, then reclaim it from the shipper in the UK. The shipper has already charged the customer for the French tax, so they have the money already available to pay the courier.
When a shipper gets to a certain size, there is also a separate question of whether it’s economically worthwhile establishing a local office in an EU state. Many large companies will end up doing this under current rules I think. HMRC is already advising them to do so (which the Brexit-voting government is very unhappy about).
Pre brexit and the hmrc changes some USA companies offered DDP for orders to the uk and so they did think there was another point to it than avoiding needing to have uk registration and returns as such things didn’t exist at that point
Certainly something for me to look into though
Yes, there are some other advantages, such as making things smoother for the customer. Some companies have done DDP worldwide for a while. It is hard to do everywhere though, just because it’s always more expensive.
Another twist is offering products in local currency alongside DDP, which together always seem to make the product more expensive. I wonder whether companies set exchange rates that are unfavourable to try and cover some of these transaction costs.
My guess would be they effectively have built in a certain amount of hedging so that customers see stable prices rather than one that changes daily but the merchant is protected from normal-moderate currency fluctuations that go against them.
If prices moved with a real FX ticker you’d have people continuously refreshing the basket page to see how the price has moved. In theory landed price is changing when the price is shown on screen in a foreign currency but most consumers are probably only doing a rough conversion so don’t consider it in the same way when they see a fixed price on screen.
Absolutely, very true. Perhaps they’ve just been quite conservative in that, because the converted price always seems to be more expensive, no matter what changes there are in the exchange rate.
Germany VAT either 7% or 19%. It had a reduced rate only until end of 2020.
Thank you, yes. Noted above twice in the comments…
Hi Simon, I assume the reason that readers constantly comment the German VAT is because it is still wrong (13%) in the above article…
Thanks, Karsten
Thank you Karsten. Yes, I assume you’re right, it’s just that readers usually read the comments too. I also don’t necessarily change those things, as it makes the other comments seem a little odd. But you’re probably right, I should change it here. I’ll do so now.
Thanks Simon great summary.
I would note that it appears that quite a lot has changed and that British goods will be slightly more expensive due to the admin cost. It will be down to the UK seller if things stay unchanged or not for the customer. In the case of PS nothing is changed for the customer because you are absorbing the admin cost. Fair summary?
Yes, exactly. With the only addition that this is already the case in the rest of the world – eg in the US, you have to pay the same admin fee when something has taxes or duties. And receiving in the UK from the US too.
We may have to add that admin cost in the long run, but we may also find other ways to avoid it.
Hi
Potential buyers from Germany should note that the UK is now treated as a Non-EU country. The purchase of clothing from the UK is subject to German import levies. Import VAT of 19% is imposed on clothing with an item value up to 150€. Item value is the total acquisition costs including shipping costs. If the item value exceeds 150€, import duty will be imposed together with import VAT in a two step process. Firstly, 12% import duty is imposed on the item value. Secondly, 19% import VAT is imposed on the total of item value plus import duty. Example: item sales prize 200€, 20€ shipping, item value is 220€. Import duty is 26,40€ (220×12%). Import VAT is 46,82€ (220+26,40=246,40×19%). Total of duties payable is 73,22€.
Hope this is of help.
Detlef
Thank you Detlef. That’s helpful, except of course with the additional point that the import duty element doesn’t apply to goods that are more than 55% made in the UK or EU. So for those, it’s just the VAT, which is almost the same as the UK VAT people were paying before.
That is absolutely correct Simon, but only if, and this is of crucial importance, the UK seller complies with all requirements under the EU-UK TCA, in particular EORI no. and prior registration in REX in order to complete a statement of origin of items shipped, all of which must form part of the initial tax declaration. Failing which German customs and duties will become due inevitably. My experience unfortunately is that only few UK retailers have lined this up yet, hence German customers complain about UK goods becoming more expensive now.
Exactly. That seems to be the biggest issue at the moment – that lack of awareness and documentation is slowing everything down, or leading to a false impression that everything now has to be more expensive.
Hi Simon – if someone from your distribution team or one of the PS team could kindly respond to my PS shipment enquiries, that would be very much appreciated.
Unfortunately DHL in France do not agree with your explanation as described above and as a result, my shipment will not be released from customs until a further payment of “taxes” is made.
Best, O
Thank you, O. Is this the shipment to Monaco? If so I know the team are looking into it. There seems to be a disagreement about the trade deal status in relation to Monaco.
Yes, thank you Simon. Hopefully we can find a way around it!
Well, some shops among those praised on this site are charging the same price excluding VAT as they are including VAT in the UK, which becomes a bit steep when the shipment arrives in the EU. I’m sorry to say that all this makes it less attractive buying anything from a UK shop.
I completely understand that Sigurd. I would only ask that you don’t tar all shops with the same brush, given the lengths PS and others have gone to in order to make this as easy as possible – including taking on extra costs.
You are right, of course, and the length to which your own shop goes go remedy this situation should of course be appreciated. However, like O above a shipment from the PS shop got stuck in customs just now, until I payed some further tax to DHL. Even if they made a mistake (but that is an academic question since they would not send the goods until I payed),it shows how annoying the situation is – unfortunately!
Thank you Sigurd, yes I hear there are a couple of issues where this has happened. I know it’s probably no consolation to you, but it’s only that small number out of almost 50 sent so far. And hopefully it will get even smoother once the customs authorities are less swamped by shipments without the correct paperwork.
One of the few times I’m happy to shop from the US – all I have to worry about are import tax on goods over $800 bought from UK or Europe. Even then, Edward Green and Stefano Bemer includes duties in their pricing (wish more did that, but understand why they don’t).
Yes, excellent point. The thing that would make a lot of this easier would be if the EU, or just some countries, had similar thresholds. There was talk of it during the negotiations, but it never happened in the end.
Hi ,
Thanks and well done on this. I have not so far seen so much knowledge in one place on this subject. You could actually set up a consultancy advising companies on this type of thing!
All the best
Stephen
Regarding the falsities about UK goods now being more expensive:
Except for buying from small UK businesses and private sellers (second hand/ vintage clothes via the usual platforms) that are VAT exempt (below the 80k/y threshold). The recipient’s country won’t care about the UK’s rules for VAT exemption.
That’s not exactly the biggest chunk of the clothing industry, but it is still a lot of merchandise. Or did I miss something here?
Ok. Whatever.
I paid Sunspel shirt 50 euros on sale and 50 euro more when it came to me in Croatia. Thats 100 euros. Just like it costs regular.
Before the 1st I paid Sunspel shirt 50 euros on sale and 0 euros when it came to me in Croatia. Thats 50 euros total,just as it’s supposed to be.
I’m sorry to hear that Ilija. But as I said above, there are lots and lots of examples of companies getting this wrong – whether charging UK VAT still, or not supplying customs documentation, or not stating where things are made.
And, check whether that Sunspel T-shirt is made in the UK. It may well not be, and in that case it will have duties on it.
I had a shock when contacted by DHL. My order for your donegal brown overcoat arrived in the States, I was hit with a 28% tax!!!! Would not deliver until ransom payment. It was like being mugged! Paid it but won’t forget it.
Was not aware clothing items over $800 are taxed that amount when delivered to the US. My interest in having Steve Hitchcock make me a jacket is on hold. Can you imagine a 28% tax on a $3-4 K Jacket?
BTW…………the coat is more than wonderful and the many unsolicited compliments of it continue to surprise me.
Hi Guy,
Yes, that’s always been the case with things bought in the US – it’s nothing to do with Brexit.
If it’s any consolation though, it just shows what a good deal you get in the US, compared to most of the rest of the world. If you were buying things in the UK, EU, or most Asian countries, you’d always be paying 20%+ taxes. The US is lucky that it only has to do this above $800.
On bespoke, tailors often charge in the UK, and try and avoid the VAT that way. It’s a disputed area, but chances are you wouldn’t have to pay taxes on your jacket from Steven. Certainly, nothing will have changed since Brexit. The UK-US relationship is unaffected.
Really pleased you like the coat too.
S
Thanks for your reply, Simon.
Will place another order with you for a shirt and perhaps knitwear soon. Are you fully functional due to the shutdown in your location?
Had an exchange with Steven Hitchcock prior to my mention with you whereby he explained some steps re import tax, etc. I met him here in NYC some years ago, he’s a very informed and nice gentleman.
No worries Guy.
Yes, we’ve been fully functional throughout. The various restrictions have never stopped businesses sending out goods.
Hi Simon,
If the VAT is lower (or higher) than the UK at the shipping destination does this mean you are making (or losing) money from the customer?
Thanks,
I’m not making or losing anything, no. The VAT doesn’t go to the seller – it goes to the government. The seller is just a conduit for tax to go from you to the government.
Simon, as someone who buys clothes from all over the world, have you experience with claiming back import VAT on items from abroad that you have returned because they didn’t fit?
I’m looking to buy some items from EU countries, and understand that I’ll either pay DDP or pay the courier to release the item, but in the latter case I have no idea how I would get a refund for the import VAT if I were to return the item. Any experience would be greatly appreciated.
Good point. I don’t have any experience with that, no, because most things I’ve bought haven’t had this issue until now.
There should be a process, as there is in the US for this issue too. I’m told it’s not easy to do, but it is possible. More worth it on expensive items perhaps.
Hi Simon,
I am not convinced. As far as I understand Iron Heart set up for DDP and had to back out of that arrangement because it was too expensive – they sent an apologetic letter to customers a couple of days ago explaining that they are closed for EU business until reopening as Iron Heart Europe, or something like that. Something has changed, and someone has to pay the resulting overhead, resulting in customer complaints.
Then, after reading your post I browsed through almost twenty UK shops that I like and only a third offer DDP. This indicates the businesses are also quietly complaining, so to say. As a result, on average UK merchandise is indeed more expensive now, and UK shops go in the same category as US and Japanese shops, more or less.
I am in many cases unlikely to want to bother reading small print about DDP, because I am lazy and I don’t want to deal with chores like that in my free time. This means I am now more likely to prefer Inis Meáin over the AS Haberdashery, SNS Herning over John Smedley, Dehen 1920 over Belstaff, and Milan, Naples, Paris or Tokyo over London, etc. I am hardly alone in this.
Maybe one way to look at this entire discussion is to question whether it is possible to dispel Brexit grumbles and quiet dissatisfaction on the EU side with facts about logistics. The Brexit narrative has been “this sucks”, “we’re leaving”, “goodbye”, “open for business!” and “nothing has changed” to which the reply is somewhat understandably, “you’re disregarding the greater good” and “own your choice”. Good logistics probably aren’t going to fully make up for people’s willingness to vote against Brexit with their wallets. Facts matter, but so do feelings.
If this line of reasoning is valid, then some time will pass before we can say nothing has changed.
Thanks Stefan. I think you’re mixing up the PS store with UK shops in general. I am not saying that nothing has changed at other stores, only that it hasn’t changed at the PS one. That was the point of this post.
There is indeed a cost to DDP, and it is a steep one. We took the tricky decision to accept that cost. It’s been nice when customers have said how grateful they are for that.
It is indeed unfortunate that other businesses have not been able to take this approach, and that there is now a mix of approaches among UK shops.
As to the points about Brexit in general, I think you’ll find that all of the shops you mention, including A&S, PS etc, have none of those attitudes. Those are the attitudes of the Brexiteers only. We are not they. But unfortunately we’ve been hung up to dry nonetheless.
Hi Simon, yes indeed, mixing PS with UK in general, intentionally – much of this discussion thread reads a little bit like that, I think? And yes, tarred with the same brush, hung up to dry, nothing remotely fair about it, it’s all a little bit distasteful. A part of my point by mentioning Inis Meáin and A&S is that both sell something nearly perfect and there shouldn’t be any general reason to prefer one over the other except item by item, but now there is.
I am Icelandic, incidentally, albeit permanently settled in Denmark. To suggest that a smaller nation should not choose to be part of a larger whole would be throwing rocks from a glass house, for me, and I did not mean to do that. My personal opinion is limited to cursing Brexit for messing with one of my hobbies, with tongue in cheek and a smirk.
I wish you all the best with the PS shop, and I hope that competition between the couriers will gradually reduce the hit on your margins. It has been a little while since I ordered anything from PS but we’ve got covid and social isolation to blame for that, not Brexit.
Thanks Stefan. If I can just stop all British suppliers from being tarred with the same brush – after all the work we’ve done to make this so smooth, and the extra costs we’ve incurred – that would be all I ask!
Hello Simon, i have my first bespoke Huntsman blazer still on the first fitting stage, my measurements were taken 1 year ago pre-covid. When and if i get to the final fitting and it’s ready for collection, i will probably go and collect the blazer in person instead of having it shipped over to Portugal and risking being slapped with a monstrous tax bill.
Regarding Savile Row bespoke, the whole process will certainly become more complex for EU customers.
Thank you for article.
I wouldn’t worry too much about that, only because the tailors have managed to cope so well with selling to the US, Asia and everywhere else for a long time. But hard to tell exactly what that approach will be yet
Hi Simon
I was going to leave this message further up the chain of comments regarding the hold up with DHL but thought it may be better here so that it has more coverage, especially in light of some of the latest comments.
I am happy to report that my order has arrived free of DHL “taxes”. As you say, nothing has changed!
Many thanks to you and your team for dealing with my shipment issue.
And very well done on the chambray. Fantastic!
Oh good, that’s great to hear, and thanks for taking the time to post it as well
Best
Simon
I have just received the message in the Dick’s Edinburgh newsletter informing their European customers that they now offer a DDP service, and that the price shown on their website is final, i.e. no extra charges, fees or taxes payable on arrival.
I should think that this is the proper way (and exactly as the PS shop did it) which is expected by European customers in order to continue buying from UK retailers.
Absolutely agree Detlef. PS sponsor Cavour ships DDP and I am much more likely to buy from them simply because I know exactly what I will have to pay. In the case of buying from UK retailers at the moment, I can’t be sure (in part due to a lack of experience on my part, but nevertheless), and so am less likely to buy there. I am hoping at least a few will go this route, which appears to me to be easiest for consumers (even if you end up paying a small premium for the convenience).
“…please help counter the falsities about UK goods now being more expensive.”
That’s the sentence in the original post that triggered the discussion which mixed up the PS shop with the situation in the clothing industry in the UK in general.
There ARE exceptions to that statement.
Good point Nikolai. That could have been expressed better. The thing I was trying to counter was that people have been saying ALL British goods are now more expensive necessarily. Which isn’t the case. But neither is everything the same or as easy, with every brand. Neither extreme is true.
It is a tricky situation for sure.
And in the long run for some businesses, prices will have to be adjusted. It’s going to be a long time before the impact can be estimated.
For now, it’s messier than it has to be.
The fact that courier shipments and national postal service shipments go through two different types of customs processing is something that some sellers don’t seem to realise. Apart from the extra charges issue, it is also worth considering that what works for a courier-attached processing may not be what local customs want to see.
In the past, German local customs had a tendency (I would estimate a 60-70% tendency, based on hundreds of shipments from outside the EU) to disregard customs forms entirely, assuming these to be prone to false data, and to demand an invoice instead.
Useful, thanks Nikolai. I guess good to know of issues like those, which existed before Brexit too
Hi Simon,
Let me challenge you after reading this NYT piece and the related one in the FT:
Could Brexit Destroy British Fashion?
https://www.nytimes.com/2021/02/19/fashion/brexit-british-fashion.html?referringSource=articleShare
Financial Times,
‘British brands will die’: Fashion raises the alarm on Brexit trade deal
—
Grace Cook
—
Read the full article at:
https://on.ft.com/2YJ7ZpZ
As the Brexit implications for British fashion are much larger than the important VAT/ customs issues, do you agree with the pessimistic views? If not, what makes you optimistic and what should change (maybe a separate post might be of interest to your loyal readers). For instance, I fear that distribution of online sales of EU brands will increasingly move from London to the EU. If you are an Italian brand and have a large EU client base, why distribute from London (eg via The Rake or others) when you can distribute from Milan or Naples? Many thanks and a good weekend
Hi,
Interesting pieces. I think this is really the subject of a second article, rather than relevant to this one. I do think there will be an advantage to being based in the EU going forward, yes. Though it will also depend on where your customers are, as you say. For example, only around 20% of PS customers are in the EU – most are the UK and US
I’ve actually stopped shopping from a lot of European shops I used to use because third party VAT/duties and re-claiming for returned products is such a hassle now. To be fair, I think that was an intended consequence…
Dear Simon,
Thank you for another excellent article and may I raise a point regarding small UK makers under the VAT threshold here that previously exported happily to Europe without penalty who now see their customers having to pay an extra c20% on landing which seems grossly unfair when their UK counterparts do not.
Should there be an option for these companies to be VAT free in Europe as they are globally.
Duties in the US & Australia are relatively nominal too so they aren’t reaping a charge elsewhere.
No one will benefit from this silly system in the long run and I feel it will simply ramp up the already sad animosity we are seeing.
Kind regards,
Tim